Monday, April 25, 2011

Karl Marx and the Dustbin of History

Like the death of Mark Twain, the imminent passing of capitalism has been predicted (or reported) for 150 years. 

Plotting the past and future of humanity is an old hobby.  In the Dialog "Cratylus", Plato recounts the story from Hesiod (Work and Days) that once, there was a Golden Age but continuous devolution has brought us to the Fifth Age, the Age of Iron, the age of war and injustice.  This, of course echoes the Eden Myth, that once upon a time, we lived in a paradise, but by our errors, we lost it.  Christianity promises a return to Paradise in the Afterlife for God’s “chosen” who find Salvation through His Son.  Karl Marx and Friedrich Engels secularized the myth by wrapping it in economics.  Marx’s theories are well-known.  His influence is undeniable.  However, Marx relied on the works of others to develop and validate his theories.  Some of the source material was in error.  Those who followed Marx –especially Marxists – accepted his assumptions without reconsideration. 
  • Marx did not question the labor theory of value.  But if labor alone gives value, we could get rich by digging holes and filling them up.  The most careful workmanship invested in the most beautiful and useful object is wasted if no one else wants it.   Modes of television were invented in the 1890s.  The first personal computer was the IBM 5100 from 1975, a solution looking for a problem.  Labor does not give value.  Value is perceived by the buyer.
  • It is famous that Marx predicted his proletarian uprisings in England or Germany and that the first so-called “communist” or socialist nation was an agricultural hinterland. 
  • When Marx predicted that the workers would obtain the modes of production, he was not thinking of employee stock option plans or employees forcing leveraged buy-outs of their operating divisions from the parent corporation.
  •  Marx complained that capitalism destroyed the natural state of women for motherhood and homemaking.
  •  Relying heavily on English history, Marx pinpointed the closing of common lands and the mass migration of former serfs into the cities to become proletarians.  But that, too, happened in Rome.  Moreover, Roman expansion, especially into Gaul, but also elsewhere, was specifically the founding of new towns surrounded by new farms – a process exhibited by the archaic (pre-classical) Greeks who colonized Middle Earth from the Crimea to Spain.  
  • Marx thought that gold was the highest form of commodity money and that money originated as commodity exchange in indirect barter.  This view is shared by capitalist (libertarian) economists today based on its being accepted by the Austrian School of Carl Menger and Ludwig von Mises.  The historical record does not support it.  
  • Marx’s theory of dialectic evolution is unvalidated (and in fact disproved) against the historical record of places not known to him, such as China, Mesoamerica, and Sub-Saharan Africa. 
Largely today, in American university classes in economics, Marx is relegated the margins of first year textbooks. The new center is held by Milton Friedman and the monetists.  Diametrically opposite Marx but also in the margins are the radical Austrians, such as Ludwig von Mises who advocate laissez-faire (which Friedman did not).   

In sociology, Marx still holds sway.  Criticisms from the left come from postmodernists who claim that there is no reality and even if there were you could not know it.  (Physicist Alan Sokol who exposed and discredited that "fashionable nonsense" is a Marxist.) There is no "right wing" - no school of individualism - in sociology, or at least, they are few and far between.  Organizations and Markets is a blog from sociologists who are influenced by the Austrian school of economics.  The four professors - Nicolai J. Foss, Peter G. Klein, Richard N. Langlois, and Lasse B. Lien - span two continents. 

Debt: the Seed of Civilization
Venture Capital
Money as Living History
Workers Paradise Promised an End to Money

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